⚖️What rules govern the public procurement process?
There are five principles for public sector procurement set out in the Constitution which must be followed. Every contract for goods or services by an organ of state in any sphere of government must be fair, equitable, transparent, competitive and cost-effective.
These principles inform the laws and regulations which govern the public sector procurement process, and how private companies can tender to supply goods and services. Where procedures are not not followed correctly, contracts can be challenged in courts. These laws also criminalise certain behaviours, and can result in suppliers or public officials receiving fines or jail time.
The laws governing the procurement process
The Constitution - Section 217
In order to implement government’s procurement plans, and purchase a good or service, a procurement process that is fair, equitable, transparent, competitive and cost-effective must be followed.
https://www.gov.za/documents/constitution-republic-south-africa-1996-chapter-13-finance#217
The Public Finance Management Act 1 of 1999
This Act - widely known as the PFMA - regulates financial management, including procurement, at provincial and national levels of government.
http://www.treasury.gov.za/legislation/pfma/
The Municipal Finance Management Act 56 of 2003 (and Regulations)
This Act - widely known as MFPA - regulates financial management, including procurement, at the municipal level of government.
http://mfma.treasury.gov.za/Pages/Default.aspx
The Preferential Procurement Policy Framework Act 5 of 2000 (and Regulations)
This Act - widely known as the PPPFA - regulates the use of procurement to achieve certain government policy objectives, for example increased use of local suppliers, increased use of suppliers with excellent B-BBEE credentials, or contracting with historically disadvantaged persons.
A preferential procurement policy must be implemented within the following framework:
For contracts above a value of R50 million, a maximum of 10 scoring points may be allocated for “specific goals” such as historical disadvantage. The remaining 90 points must be allocated to price and functionality concerns.
For contracts equal to or below R50 million (but above R30 million) a maximum 20 scoring points may be allocated for these “specific goals” and the remaining 80 points must be allocated to price and functionality concerns.
It also allows for the use of procurement to favour locally produced goods over imported goods. This is known as the “local content” requirement.
These concerns are evaluated at BEC and BAC stage.
The Promotion of Access to Information Act (2000) (PAIA)
Documents relating to the procurement process can be requested from public institutions using the processes provided for in the Promotion of Access to Information Act (PAIA). PAIA requests must be made using Form A, as described in Section 18 of the Act. Government departments and SOEs should have copies of this form available on their websites, along with contact details of the Information Officer for that body. There is a fee of R35 for requesting records. Whilst there is transparency embedded in the procurement process itself, this is an additional avenue for transparency that buttresses the PFMA's own provisions.
The rules governing the procurement process
National Treasury's regulatory function
National Treasury Instruction Notes, Circulars and Practice notes form foundational guidance for procurement practitioners.
http://ocpo.treasury.gov.za/Buyers_Area/Legislation/Pages/default.aspx
The procuring entity’s supply chain management (SCM) policy
This policy guides an entity's preferred approach ensuring policy objectives the proper flow of goods and services between the supplier and the public sector institutions, in the right quality and quantity whilst advancing. Also refer to the document Supply Chain Management: A Guide for Accounting Officers.
Entities responsible for managing the procurement supply chain
The Accounting Officer in a public entity is the individual, or structure, who/which is ultimately responsible for the procurement process, as well as all other financial management of public entities.
Every government department (national or provincial) and constitutional institution will have an Accounting Officer. Every public entity will have an Accounting Authority. Accounting Officers and Accounting Authorities have similar responsibilities.
The Auditor General will complete an annual report of procurement activity within a government institution, providing oversight at the highest level.
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